The Amazon-New York Deal, Like the Foxconn Deal, Was Bad Policy

Amazon said on Thursday that it will cancel its plans to add a second corporate headquarters in New York City. The company had pledged to build a campus in Queens’ Long Island City in exchange for $3 billion in subsidies.

In a statement, Amazon blamed local politicians for the reversal. “For Amazon, the commitment to build a new headquarters requires positive, collaborative relationships with state and local elected officials who will be supportive over the long-term,” the statement read. “A number of state and local politicians have made it clear that they oppose our presence and will not work with us to build the type of relationships that are required to go forward with the project.

In a period of growing antipathy toward billionaires, Amazon’s corporate-welfare haul struck many—including me—as a gratuitous gift to a trillion-dollar company that was probably going to keep adding thousands of jobs to the New York region anyway. The company has more than 5,000 employees in the five boroughs, including 2,500 at a Staten Island fulfillment center and at least one thousand more in the Manhattan West office building.

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The larger truth is that corporate subsidies, including the $3 billion package offered to Amazon, are often pernicious and usually pointless. Studies showthat these sorts of measures “have no discernible impact on firm expansion, measured by job creation.” Yet every year, local governments spend more than $90 billion to move headquarters and factories between states, a wasteful zero-sum exercise whose cost is more than the federal government spends on affordable housing, education, or infrastructure. In the most garish example of corporate-welfare absurdity, Foxconn, the Taiwanese manufacturing company, solicited up to $4 billion in subsidies from Wisconsin in exchange for a factory and tens of thousands of workers. Now it’s an open question whether that facility will ever get built.

There’s a broad coalition – across the political spectrum – that opposes these deals. In New York, opponents were mostly progressives, but free-market advocates have always opposed these giveaways funded on the backs of ordinary taxpayers.

Indeed, each and every person – including Whitewater’s public officials, business lobbyists, and local reporters – who kept pushing Foxconn is either disqualifyingly ignorant or disconcertingly mendacious.